STOCK SUBSCRIPTION AGREEMENT
This STOCK SUBSCRIPTION AGREEMENT, dated as of April 3, 2001 (this
"Agreement"), is by and among Gryphon Partners II, L.P. ("GPII"), Gryphon
Partners II-A, L.P. ("GPII-A" and together with GPII, the "Principal
Purchaser"), Outsourcing Solutions Inc., a Delaware corporation (the "Company"),
and the additional investors identified on the Schedule of Purchasers attached
hereto as Exhibit A (the Principal Purchaser and each such additional investor
individually a "Purchaser" and collectively the "Purchasers").
Pursuant to the terms and subject to the conditions set forth herein, the
Purchasers desire to subscribe for, and the Company desires to issue to the
Purchasers, shares of the Senior Common Stock, $.01 par value per share, of the
Company (the "Senior Common Stock").
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
ISSUANCE OF STOCK;
PAYMENT OF SUBSCRIPTION PRICE; CLOSING
1.01 Issuance of Stock at the Initial Closing.
(a) The Company shall adopt and, after obtaining the requisite
stockholder approval, file with the Secretary of State of the State of Delaware
on or before the Initial Closing (as defined below) an amendment to the
Certificate of Incorporation (as defined below) in the form attached hereto as
Exhibit B (the "Certificate Amendment").
(b) On or prior to the Initial Closing, the Company shall have
authorized (i) the sale and issuance to the Purchasers hereunder at the Initial
Closing and any Subsequent Closings (as defined below) of up to 881,952.79
shares of Senior Common Stock (as equitably adjusted for any stock splits, stock
combinations, stock splits or the like). The Senior Common Stock shall have the
rights, preferences, privileges and restrictions set forth in the Certificate of
Incorporation (as defined below) as amended by the Certificate Amendment. The
shares of Senior Common Stock to be sold pursuant to this Agreement are
collectively referred to herein as the "Sale Shares."
(c) Subject to the terms and conditions of this Agreement, including
without limitation the satisfaction of each of the conditions set forth in
Sections 5.01, 5.02 and 5.03 or the waiver thereof by the Company or the
applicable Purchaser, as applicable, each Purchaser agrees, severally but not
jointly, to purchase at the Initial Closing, and the Company agrees to sell and
issue to each Purchaser at the Initial Closing, that number of Sale Shares set
forth opposite each Purchaser's name on Exhibit A in the column entitled "Sale
Shares To Be Purchased at Initial Closing" at a price equal to $49.00 per share.
(d) At the Initial Closing, the Company and each Purchaser shall
become a party to (i) the Amended and Restated Stockholders Agreement dated the
Initial Closing Date in the form attached hereto as Exhibit C (the "Stockholders
Agreement"), and (ii) the Amended and Restated Registration Rights Agreement
dated the Initial Closing Date in the form attached hereto as Exhibit D (the
"Registration Rights Agreement"), and the Company, Madison Dearborn Capital
Partners III, L.P. and the Principal Purchaser shall each become a party to the
Voting Agreement dated the Initial Closing Date in the form attached hereto as
Exhibit E (the "Voting Agreement," and together with the Stockholders Agreement
and the Registration Rights Agreement, the "Transaction Documents") and the
Company and each Purchaser shall have the rights and obligations hereunder and
thereunder.
1.02 Subsequent Closings.
(a) In addition to any Sale Shares purchased by the Principal
Purchaser at the Initial Closing, and pursuant to the terms and subject to the
conditions of this Section 1.02, the Principal Purchaser shall have, at any time
prior to the Termination Date, the right but not the obligation, to purchase
from the Company up to an aggregate of 392,156.86 Sale Shares at a purchase
price of $51.00 per share (such amounts as equitably adjusted for any stock
splits, stock combinations, stock splits or the like) (the "Purchase Option").
(b) On or prior to the Termination Date, the Principal Purchaser may
exercise the Purchase Option at any time and from time to time by written notice
to the Company which written notice shall set forth (i) the number of Sale
Shares to be purchased by the Principal Purchaser pursuant to such exercise of
the Purchase Option, and (ii) the allocation of such Sale Shares between GPII
and GPII-A (the "Purchase Option Notice"). The closing of such issuance and
purchase of the Sale Shares specified in a Purchase Option Notice shall take
place 10 business days from the date of the Purchase Option Notice or such later
time and date as required by law or as the Principal Purchaser and the Company
shall mutually determine.
(c) With respect to the Sale Shares specified in any Purchase Option
Notice, the Purchase Option shall be deemed to have been exercised as of 5 p.m.
local time at the Company's address as specified pursuant to Section 8.06 on the
on the day that such Purchase Option Notice is deemed received by the Company
pursuant to Section 8.06.
(d) In the event that the Company shall propose at any time: (i) to
declare any dividend or distribution upon its capital stock, whether in cash,
property, stock or other securities, whether or not a regular cash dividend and
whether or not out of earnings or earned surplus; (ii) to offer for subscription
pro rata to the holders of any class or series of its stock any additional
shares of stock of any class or series or other rights; (iii) to effect any
reclassification or recapitalization of any shares of capital stock outstanding
involving any change in such shares of capital stock; or (iv) to merge or
consolidate with or into any other corporation, or sell, lease or convey all or
substantially all its property or business, or to liquidate, dissolve or wind
up; then, in connection with each such event, the Corporation shall send to the
Principal Purchaser at least 10 business days prior written notice of the date
on which a record shall be taken for such action or event (and specifying the
date on which the holders of such capital stock shall be entitled thereto) or
for determining rights to vote in respect of any such matters, as applicable.
(e) Upon written notice from GPII or GPII-A, as applicable, each of
GPII and GPII-A may assign their rights pursuant to this Section 1.02 with
respect to some or all of the remaining Sale Shares subject to the Purchase
Option to any "Affiliate" (as such term is defined in the Stockholders
Agreement) of GPII or GPII-A, as the case may be, and such assignee shall be
deemed a Principal Purchaser for purposes of this Section 1.02, but not for any
other purposes hereunder. Any issuance of Sale Shares by the Company upon
exercise of the Purchase Option by such assignee shall be treated for purposes
of the Stockholders Agreement as if such Sale Shares had been transferred by
GPII or GPII-A, as applicable, to such assignee and such deemed transfer shall
be subject to the requirements of the Stockholders Agreement.
(f) The Purchase Option shall expire, to the extent not previously
exercised, as follows: (1) automatically on the first anniversary date of the
Initial Closing; and (2) if earlier, by mutual consent of the Company and the
Principal Purchaser (the earlier of (1) and (2) being referred to herein as the
"Termination Date").
1.03 Closings. At each Closing the Company shall deliver to each Purchaser
(with respect to the Initial Closing) and to the Principal Purchaser (with
respect to the Initial Closing and each Subsequent Closing) a certificate or
certificates representing that number of Sale Shares sold to such Purchaser at
such Closing against payment of the purchase price therefor by check or wire
transfer; provided, however, that the delivery of such certificates shall be
subject to any requirement that the Purchasers pledge such Sale Shares pursuant
to and in conformance with that certain Credit Agreement dated as of November
30, 1999 among the Company, DLJ Capital Funding, Inc., Xxxxxx Trust and Savings
Bank, Fleet National Bank, and the additional financial institutions and Persons
parties thereto, as amended (the "DLJ Credit Agreement"). The closing of the
purchase and sale of Sale Shares as provided in Section 1.01 and the
consummation of the other transactions contemplated to occur at such closing as
set forth herein (the "Initial Closing") and each closing of the purchase and
sale of Sale Shares as provided in Section 1.02 and the consummation of the
other transactions contemplated to occur at each such closing as set forth
herein (each, a "Subsequent Closing") shall take place at the offices of
Xxxxxxxx & Xxxxx, 000 Xxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000. The Initial
Closing shall take place upon the later of (i) 10 business days from the date
hereof, and (ii) as soon as practicable after the last of the conditions set
forth in Sections 5.01, 5.02 and 5.03 are fulfilled or waived (subject to
applicable law), or at such later time and place and on such later date as the
Principal Purchaser and the Company shall mutually determine. The Initial
Closing and each Subsequent Closing are sometimes referred to herein
individually as a "Closing" and collectively as the "Closings." The date of each
such Closing is referred to herein as the "Initial Closing Date," "Subsequent
Closing Date" or as a "Closing Date," as applicable.
1.04 Obligations are Several. All obligations of the Purchasers pursuant to
this Article I shall be individual, and not joint and several. Without limiting
any of the conditions set forth in Article V, the failure of any Purchaser to
purchase the applicable Sale Shares at a Closing shall not increase any other
Purchaser's obligation or commitment, if any, to purchase Sale Shares.
ARTICLE II
[RESERVED]
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Company. Except as set forth in
the Company's disclosure letter (the "Company's disclosure letter"), delivered
concurrently with the delivery of this Agreement, the Company hereby represents
and warrants to each Purchaser as of the date hereof and as of the Initial
Closing Date as follows:
(a) Due Organization, Good Standing and Corporate Power. Each of the
Company and its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
each such corporation has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. Each of the Company and its Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except in such jurisdictions
where the failure to be so qualified or licensed and in good standing would not
have a material adverse effect on the business, prospects, operations, results
of operations, or financial condition (the "Condition") of the Company and its
Subsidiaries taken as a whole. The Company has made available complete and
correct copies of the Certificate of Incorporation and By-Laws of the Company
and the comparable governing documents of each of its Subsidiaries, in each case
as amended and as in effect as of the date this representation and warranty is
given (the "Certificate of Incorporation" and "By-Laws," respectively).
(b) Authorization and Validity of Agreement. The Company has full
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by the Company, and
the consummation by it of the transactions contemplated hereby, have been duly
authorized and approved by its Board of Directors and, to the extent required,
its stockholders and no other corporate action on the part of the Company or any
of its Subsidiaries is necessary to authorize the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming the due execution and delivery of this
Agreement by the Purchasers, is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.
(c) Capitalization.
(i) As of the Initial Closing, the authorized capital stock of
the Company consists of 15,000,000 shares of Voting Common Stock, par value
$0.01 per share (the "Voting Common Stock"), 2,000,000 shares of Non-Voting
Stock, par value $0.01 per share (the "Non-Voting Common Stock"), 881,953 shares
of Senior Common Stock, and 300,000 shares of Preferred Stock, no par value (the
"Preferred Stock"). With respect to such 300,000 shares of Preferred Stock, (i)
50,000 shares are designated as Class A 14% Senior Mandatorily Redeemable
Preferred Stock, of which 25,000 shares are designated as Class A 14% Senior
Mandatorily Redeemable Preferred Stock, Series A; (ii) 150,000 shares are
designated as Class B 14% Senior Mandatorily Redeemable Preferred Stock, of
which 75,000 shares are designated as Class B 14% Senior Mandatorily Redeemable
Preferred Stock, Series A, and (iii) 50,000 shares are designated as Junior
Preferred Stock. The Company may issue up to one additional series of Class A
14% Senior Mandatorily Redeemable Preferred Stock and up to one additional
series of Class B 14% Senior Mandatorily Redeemable Preferred Stock solely to
holders of the Class A 14% Senior Mandatorily Redeemable Preferred Stock, Series
A and the Class B 14% Senior Mandatorily Redeemable Preferred Stock, Series A,
respectively. As of the date hereof, (A) 6,088,479.30 shares of Voting Common
Stock were issued and outstanding; (B) 480,321.30 shares of Non-Voting Common
Stock were issued and outstanding; (C) no shares of Senior Common Stock were
issued and outstanding; (D) 25,000.00 shares of Class A 14% Senior Mandatorily
Redeemable Preferred Stock were issued and outstanding, all of which were shares
of Class A 14% Senior Mandatorily Redeemable Preferred Stock, Series A; (E)
75,000.00 shares of Class B 14% Senior Mandatorily Redeemable Preferred Stock
were issued and outstanding, all of which were Class B 14% Senior Mandatorily
Redeemable Preferred Stock, Series A; (F) no shares of Class A 14% Senior
Mandatorily Redeemable Preferred Stock or shares of Class B 14% Senior
Mandatorily Redeemable Preferred Stock of any series other than Series A (in
each case) were issued and outstanding; and (G) 7,000.00 shares of Junior
Preferred Stock were issued and outstanding. All issued and outstanding shares
of capital stock of the Company have been validly issued and are fully paid and
nonassessable. Except as set forth in this Section 3.01(c)(i) or in Section
3.01(c)(i) of the Company's disclosure letter, (a) there are no shares of
capital stock of the Company authorized, issued or outstanding and (b) there are
not as of the date hereof, and at the Initial Closing there will not be, any
outstanding or authorized options, warrants, rights, subscriptions, agreements,
convertible or exchangeable securities (which options, warrants, rights,
subscriptions, agreements, convertible or exchangeable securities shall be
disclosed only in aggregate number in Section 3.01(c)(i) of the Company's
disclosure letter), obligations, claims of any character, preemptive rights,
rights of first refusal, or other commitments, contingent or otherwise, relating
to Common Stock or any other shares of capital stock of the Company, pursuant to
which the Company is or may become obligated to issue shares of Common Stock,
any other shares of its capital stock or any securities convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares of the
capital stock of the Company. All preemptive rights, rights of first refusal or
similar rights that may be triggered by the transactions contemplated hereunder
shall, with respect to each Closing, have been complied with or waived. The
Company has no authorized or outstanding bonds, debentures, notes or other
indebtedness the holders of which have the right to vote (or convertible or
exchangeable into or exercisable for securities having the right to vote) with
the stockholders of the Company or any of its Subsidiaries on any matter
("Voting Debt"). A true and complete table showing all of the equity security
holders of record of all of the equity securities of the Company as of the date
hereof is included in Section 3.01(c)(i) of the Company's disclosure letter and
the Company shall deliver to the Principal Purchaser immediately prior to the
Initial Closing a true and complete table showing all of the equity security
holders of record of all of the equity securities of the Company as of the
Initial Closing. The Company shall have reserved a total of 881,952.78 shares of
Senior Common Stock (as equitably adjusted for any stock splits, stock
combinations, stock splits or the like) for issuance pursuant to Sections 1.01
and 1.02 hereof, and a total of 881,952.78 shares of Voting Common Stock (as
equitably adjusted for any stock splits, stock combinations, stock splits or the
like and as may be adjusted as a result of any adjustment in the conversion rate
of the Senior Common Stock pursuant to the Certificate of Incorporation as
amended by the Certificate Amendment) for issuance upon conversion of the Senior
Common Stock.
(ii) Section 3.01(c)(ii) of the Company's disclosure letter lists
all of the Company's Subsidiaries. Except as set forth on Section 3.01(c)(ii) of
the Company's disclosure letter, all of the outstanding shares of capital stock
of each of the Company's Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable and are owned, of record and
beneficially, by the Company, free and clear of all Encumbrances (as defined
below), options or claims whatsoever, except for Encumbrances and claims created
pursuant to the DLJ Credit Agreement. Except for such shares and except as set
forth on Section 3.01(c)(ii) of the Company's disclosure letter, no shares of
capital stock of any of the Company's Subsidiaries are reserved for issuance and
there are no outstanding or authorized options, warrants, rights, subscriptions,
claims of any character, agreements, obligations, convertible or exchangeable
securities, or other commitments, contingent or otherwise, relating to the
capital stock of any Subsidiary, pursuant to which such Subsidiary is or may
become obligated to issue any shares of capital stock of such Subsidiary or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of such Subsidiary. Except as set forth on Section
3.01(c)(ii) of the Company's disclosure letter, the Company does not own,
directly or indirectly, any capital stock or other equity interest in any Person
or have any direct or indirect equity or ownership interest in any Person and
neither the Company nor any of its Subsidiaries is subject to any obligation or
requirement to provide funds for or to make any investment (in the form of a
loan, capital contribution or otherwise) to or in any Person. None of the
Company's Subsidiaries have any authorized, issued or outstanding Voting Debt.
(d) Consents and Approvals; No Violations. Assuming that, with respect
to each applicable Closing, the filings, if any, required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), are made and the waiting period thereunder has been terminated or has
expired, the execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby will not:
(1) violate any provision of the Certificate of Incorporation, the Certificate
Amendment or the By-Laws of the Company or the comparable governing documents of
any of its Subsidiaries; (2) violate any statute, ordinance, rule, regulation,
order or decree of any court or of any governmental or regulatory body, agency
or authority applicable to the Company or any of its Subsidiaries or by which
any of their respective properties or assets may be bound; (3) require any
filing with, or permit, consent or approval of, or the giving of any notice to,
or obtaining any new or additional licenses from any governmental or regulatory
body, agency or authority; and (4) except as set forth in Section 3.01(d) of the
Company's disclosure letter, result in a violation or breach of, conflict with,
constitute (with or without due notice or lapse of time or both) a material
default (or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Encumbrance upon any of
the properties or assets of the Company or any of its Subsidiaries under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, franchise, permit, agreement, lease, franchise agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party, or by which it or any of their respective properties or assets are bound
or subject, except for, in the case of clauses (2), (3) and (4) above, such as
would not have a material adverse effect on the Condition of the Company and its
Subsidiaries taken as a whole, and would not prevent or materially delay
consummation of the transactions contemplated by this Agreement.
(e) Financial Statements; Commission Filings.
(i) The Company has heretofore furnished the Purchasers with the
consolidated balance sheets of the Company and its Subsidiaries as at December
31, 2000 and 1999 and the related consolidated statements of operations, changes
in stockholder's equity and cash flows for the periods then ended, audited by
Deloitte & Touche LLP (with respect to the period ending December 31, 1999) and
by PricewaterhouseCoopers LLP (with respect to the period ending December 31,
2000) (collectively, the "Audited Financial Statements") and the unaudited
consolidated balance sheet of the Company as at February 28, 2001, and the
related unaudited consolidated statements of operations, changes in
stockholders' equity and cash flows for the two month period then ended (the
"Unaudited Financial Statements" and together with the Audited Financial
Statements, the "Financial Statements"). The consolidated unaudited balance
sheet as at February 28, 2001, is sometimes referred to herein as the "Balance
Sheet" and February 28, 2001, is sometimes herein referred to as the "Balance
Sheet Date." Such Financial Statements including the footnotes thereto, except
as indicated therein, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered thereby, are consistent with the books and records of the Company,
fairly present in all material respects the financial position of the Company
and its Subsidiaries and the results of their operations and cash flows at such
dates and for such periods, except that the Unaudited Financial Statements
(including the Balance Sheet) do not contain footnotes and are subject to
year-end adjustments.
(ii) The Company has filed all forms, reports and documents with
the Securities and Exchange Commission (the "Commission") required to be filed
by it pursuant to the Federal securities laws and the Commission rules and
regulations thereunder, and all forms, reports and documents filed with the
Commission by the Company (collectively, the "Commission Filings") have complied
in all material respects with the applicable requirements of the Federal
securities laws and the Commission rules and regulations promulgated thereunder.
As of their respective dates, the Commission Filings did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company has
delivered or made available to the Purchasers true and complete copies of each
Commission Filing filed after January 1, 1998.
(f) Absence of Certain Changes. Other than as set forth in Section
3.01(f) of the Company's disclosure letter, since December 31, 2000, (i) there
has been no material adverse change in the Condition of the Company and its
Subsidiaries taken as a whole, and (ii) the business of the Company and its
Subsidiaries has been conducted in the ordinary course and in a manner
consistent with past practice.
(g) Title to Properties; Encumbrances. Except as set forth in Section
3.01(g) of the Company's disclosure letter, the Company and each of its
Subsidiaries has good and valid title to (i) all of its material tangible
properties and assets (real and personal), including, without limitation, all
material properties and assets (real and personal) reflected in the Balance
Sheet except as indicated in the notes thereto and except for properties and
assets reflected in the Balance Sheet which have been sold or otherwise disposed
of in the ordinary course of business after the Balance Sheet Date, and (ii) all
the material tangible properties and assets (real and personal) purchased by the
Company or any of its Subsidiaries since the Balance Sheet Date except for such
properties and assets which have been sold or otherwise disposed of in the
ordinary course of business (collectively, the "Assets"); in each case subject
to no encumbrance, lien, security interest, charge or other restriction of any
kind or character (each an "Encumbrance") except (1) as reflected in Section
3.01(g) of the Company's disclosure letter, (2) Encumbrances reflected on the
Balance Sheet, and (3) Encumbrances which do not materially detract from the
value of, or materially impair the use of, any material property by the Company
or any of its Subsidiaries in the operation of its respective business or which
do not have a material adverse effect on the Condition of the Company and its
Subsidiaries, taken as a whole. Following the consummation of the transactions
contemplated by this Agreement, either the Company or a Subsidiary, as the case
may be, will continue to own good and valid title to the Assets without
incurring any material penalty or other adverse consequence, including, without
limitation, any increase in rentals, royalties, or licenses or other fees
imposed as a result of, or arising from, the consummation of the transactions
contemplated by this Agreement.
(h) Leases. Section 3.01(h) of the Company's disclosure letter
contains a list of all leases to which the Company or any Subsidiary is a party
requiring an annual aggregate payment of at least $200,000. The Company or its
applicable Subsidiary has a good and valid leaseholder interest in and to all of
the real property subject to any such lease with respect to which it is a lessee
("Leased Property"). Except as otherwise set forth in Section 3.01(h) of the
Company's disclosure letter, each lease set forth therein is in full force and
effect and is enforceable in accordance with its terms; there are no material
leases, subleases, licenses, concessions or other agreements (written or oral)
granting to any Person or entity (other than the Company or its Subsidiaries)
the right to use or occupy the Leased Property; all rents and additional rents
due to date from the Company or such Subsidiary on each such lease have been
paid; in each case, neither the Company nor any Subsidiary has received notice
that it is in material default thereunder; and, to the Knowledge of the Company
there exists no material event, occurrence, condition or act (including the
consummation of the transactions contemplated hereby) which, with the giving of
notice, the lapse of time or the happening of any further event or condition,
would become a material default by the Company or any Subsidiary under such
lease.
(i) Material Contracts.
(i) Except as set forth in Section 3.01(h), 3.01(i)(i) or 3.01(m)
of the Company's disclosure letter, or as listed in the exhibit index to the
Company's Form 10-K for the year ended December 31, 2000, as supplemented by the
Company's other reports filed pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") prior to the date hereof
(collectively, the "Filed Contracts"), neither the Company nor any Subsidiary
has or is bound by (a) any agreement, contract or commitment relating to the
employment of any Person by the Company or any Subsidiary which cannot be
terminated by the Company or the Subsidiary upon notice of 60 days or less
without penalty or premium and involve compensation in excess of $150,000 on an
annual basis, (b) any agreement, contract or commitment materially limiting the
freedom of the Company or any Subsidiary to engage in any line of business or to
compete with any other Person, (c) any agreement, contract or commitment not
entered into in the ordinary course of business which materially affects the
business of the Company and the Subsidiaries taken as a whole and is not
cancelable without penalty within 90 days, or (d) any agreement, contract or
commitment required to be filed with the Commission pursuant to any or Items
601(b)(2), 601(b)(4), 601(b)(9) or 601(b)(10) of Regulation S-K under the
Exchange Act. The Filed Contracts and the contracts listed in Sections 3.01(h),
3.01(i)(i) and 3.01(m) of the Company's disclosure letter are collectively
referred to herein as the "Material Contracts."
(ii) True, correct and complete copies of all of the Material
Contracts which are written, or written summaries of oral Material Contracts,
including all amendments and supplements thereto, have been made available to
the Purchasers. Each of the Material Contracts is in full force and effect and
is valid, binding and enforceable in accordance with its terms except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting enforcement of creditor's rights generally
and except insofar as the availability of equitable remedies may be limited by
applicable law and except as otherwise would not have a material adverse effect
on the Condition of the Company and its Subsidiaries taken as a whole. The
Company and its Subsidiaries are not in breach of any Material Contract in any
material respect and have fulfilled, or taken all action necessary to enable
them to fulfill when due, all of their respective material obligations under
each of the Material Contracts. To the Knowledge of the Company, all other
parties to the Material Contracts have complied in all material respects with
the provisions thereof, no party is in breach thereunder and no notice of any
claim of breach thereunder has been given to the Company or its Subsidiaries
which breach would be reasonably likely to have a material adverse effect on the
Condition of the Company and its Subsidiaries taken as a whole. The Company has
no Knowledge of any intent by any party to any Material Contract to terminate or
amend the terms thereof or to refuse to renew any such Material Contract upon
expiration of its term which termination, amendment or expiration would be
reasonably likely to have a material adverse effect on the Condition of the
Company and its Subsidiaries taken as a whole.
(iii) The Company and its Subsidiaries are not in breach of any
material term, right, privilege or preference of, and have fulfilled, or taken
all action necessary to enable them to fulfill when due, all of their respective
material obligations under all classes and/or series of Preferred Stock
outstanding.
(j) Compliance with Laws.
(i) Except as set forth in Section 3.01(k) of the Company's
disclosure letter, the Company and its Subsidiaries are in compliance with all
applicable laws and regulations and all orders, judgments and decrees
(including, but not limited to, the Fair Debt Collection Practices Act and any
state or local counterpart or equivalent) relating to its business and
operations (other than with respect to taxes, Environmental Laws, employee
benefits, employee relations and federal securities laws which are the subject
of specific representations contained in this Agreement) except where the
failure to so comply would not have a material adverse effect on the Condition
of the Company and its Subsidiaries taken as a whole and would not prevent or
materially delay consummation of the transactions contemplated by this
Agreement.
(ii) The Company and each of its Subsidiaries possess all
licenses, certificates of authority, certificates of need, permits or other
authorizations and regulatory approvals required by law (a "License") necessary
for the ownership of its properties and the conduct of its business as presently
conducted in each jurisdiction in which the Company and such Subsidiary is
required to possess a License, except where the failure to possess such a
License would not have a material adverse effect on the Condition of the Company
and its Subsidiaries taken as a whole. All such Licenses are in full force and
effect and neither the Company nor any Subsidiary has received any written
notice of any event, inquiry, investigation or proceeding threatening the
validity of such Licenses, except where the failure of such Licenses to be in
full force and effect or such event, inquiry, investigation or proceeding would
not have a material adverse effect on the Condition of the Company and its
Subsidiaries taken as a whole.
(k) Litigation. Except as set forth in Section 3.01(k) of the
Company's disclosure letter, there is no action, suit, condemnation,
expropriation or other proceeding at law or in equity, or any arbitration or any
administrative or other proceeding by or before (or to the Knowledge of the
Company any investigation by) any governmental or other instrumentality or
agency, pending, or, to the Knowledge of the Company, threatened, against or
affecting the Company or any of its Subsidiaries, or any of their properties
(including, but not limited to, Leased Property) or rights which (i) has had or
is reasonably likely to have a material adverse effect on the Condition of the
Company and its Subsidiaries taken as a whole; (ii) may reasonably prevent or
materially delay consummation of the transactions contemplated by this
Agreement, or (iii) is, or is seeking certification as, a class action. In
addition, except as set forth in Section 3.01(k) of the Company's disclosure
letter, neither the Company, any of its Subsidiaries nor any of their respective
material tangible properties or assets is subject to any consent decrees or
judicial or administrative order, including without limitation under the Fair
Debt Collection Practice Act, any state law equivalent relating to the ongoing
conduct of the Company's business.
(l) Employee Benefit Plans.
(i) Section 3.01(l) of the Company's disclosure letter contains
an accurate and complete list of (a) each "employee benefit plan" (as such term
is defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) contributed to, maintained or sponsored by the
Company or any of its Subsidiaries, or with respect to which the Company or any
of its Subsidiaries has any liability or potential liability; and (b) each other
retirement, savings, thrift, deferred compensation, severance, stock ownership,
stock purchase, stock option, performance, bonus, incentive, material fringe
benefit, hospitalization or other medical, disability, life or other insurance,
and any other welfare benefit policy, trust, understanding or arrangement
contributed to, maintained or sponsored by the Company or any of its
Subsidiaries for the benefit of any present or former employee, officer or
director of the Company or any of its Subsidiaries, or with respect to which the
Company or any of its Subsidiaries has any liability or potential liability.
Each such item listed on Schedule 3.01(l) is referred to herein as a "Benefit
Plan."
(ii) Section 3.01(l) of the Company's disclosure letter also
contains an accurate and complete list of each agreement or commitment of the
Company or any Subsidiary of the Company or to which the Company or any of its
Subsidiaries may have any liability, with or for the benefit of any current or
former employee, officer or director of the Company or any of its Subsidiaries
(including, without limitation, each employment, compensation or termination
agreement or commitment but excluding employment agreements with annual payments
of less than $150,000). Each such item listed on Schedule 3.01(l) is referred to
herein as a "Compensation Commitment."
(iii) With respect to each Benefit Plan that is intended to be
qualified within the meaning of Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code") (a) it has received a determination letter, or in
the case of a standardized prototype plan, such prototype plan has received a
favorable determination letter from the Internal Revenue Service (the "IRS"), or
has been timely submitted for a determination letter from the IRS, that such
Benefit Plan is qualified under Section 401(a) of the Code, and, to the
Knowledge of the Company and its Subsidiaries, nothing has occurred since the
date of such determination letter or submission that could adversely affect the
qualification of such Benefit Plan or the exemption from taxation of the related
trust; and (b) no such Benefit Plan is a "defined benefit plan" (as defined in
Section 3(35) of ERISA) or a "multiemployer plan" (as defined in Section 3(37)
of ERISA).
(iv) Except as described in Section 3.01(l) of the Company's
disclosure letter (a) none of the Benefit Plans or Compensation Commitments
obligates the Company or any of its Subsidiaries to pay any separation,
severance, termination or similar benefit or accelerate the vesting or payment
under any Benefit Plan or Compensation Commitment solely as a result of any
transaction contemplated by this Agreement or solely as a result of a change in
control or ownership within the meaning of Section 280G of the Code; and (b)
there is no contract, agreement, plan or arrangement covering any employee or
former employee of the Company or any of its Subsidiaries that provides for
payment, prior to or in connection with this transaction by the Company or any
of its Subsidiaries that is not deductible under Section 162 or 404 of the Code,
or that is an "excess parachute payment" pursuant to Section 280G of the Code.
(v) (a) Each Benefit Plan and any related trust, insurance
contract or fund has been maintained and administered in substantial compliance
with its respective terms and in substantial compliance with all applicable laws
and regulations, including, but not limited to, ERISA and the Code; (b) there
has been no application or waiver of the minimum funding standards imposed by
Section 412 of the Code with respect to any Benefit Plan, and neither the
Company nor any of its Subsidiaries is aware of any facts or circumstances that
would materially change the funded status of any such Benefit Plan; (c) neither
the Company nor any of its Subsidiaries has incurred any liability under Title
IV of ERISA or to the Pension Benefit Guaranty Corporation; (d) there are no
pending or, to the Knowledge of the Company and its Subsidiaries, threatened,
material actions, suits, investigations or claims with respect to any Benefit
Plan or Compensation Commitment (other than routine claims for benefits), and
neither the Company nor any of its Subsidiaries has Knowledge of any facts which
could give rise to (or reasonably be expected to give rise to) any such actions,
suits, investigations or claims; (e) there have been no prohibited transactions
as defined in Section 406 of ERISA or Section 4975 of the Code with respect to
any Benefit Plan; and (f) all contributions which are due with respect to each
Benefit Plan have been timely made, and all contributions for periods ending on
the Initial Closing Date which are not then due have been accrued in accordance
with GAAP.
(vi) The Company and each of its Subsidiaries has complied in all
material respects with the health care continuation requirements of Section
4980B of the Code and Part 6 of Subtitle B of Title I of ERISA ("COBRA"); and
the Company and its Subsidiaries have no obligation under any Benefit Plan,
Compensation Commitment or otherwise to provide health or other welfare benefits
to or with respect to former employees of the Company or any of its Subsidiaries
or any other person, except as specifically required by COBRA.
(vii) With respect to each Benefit Plan and Compensation
Commitment, the Company has furnished or made available to the Purchaser true
and complete copies, as applicable, of (a) the plan documents, summary plan
descriptions and employee handbooks; (b) IRS Form 5500 Annual Report (including
all attachments) for the most recent plan year; (c) all related trust
agreements, insurance contracts or other funding arrangements; and (d) the most
recent favorable determination letter issued by the IRS.
(m) Employment Relations and Agreements. Except as set forth in
Section 3.01(m) and 3.01(l) of the Company's disclosure letter, (i) each of the
Company and its Subsidiaries is in compliance in all material respects with all
federal, state or other applicable laws respecting employment and employment
practices, terms and conditions of employment, workers' compensation, plant
closing, and wages and hours, and has not and is not engaged in any unfair labor
practice where the failure to be in compliance is reasonably likely to have a
material adverse effect on the Condition of the Company and its Subsidiaries
taken as a whole; (ii) no representation question exists respecting the
employees of the Company or any of its Subsidiaries; (iii) no collective
bargaining agreement is currently being negotiated by the Company or any of its
Subsidiaries and neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement; and (iv) neither the Company nor any of its
Subsidiaries has experienced any labor difficulty during the last year except
(in the case of this clause (iv)) as would not have a material adverse effect on
the Condition of the Company and its Subsidiaries taken as a whole. Except as
disclosed in Section 3.01(m) of the Company's disclosure letter (a) there exist
no employment, consulting, severance, indemnification agreements or deferred
compensation agreements between the Company and any director, officer or
employee of the Company or any agreement that would give any Person the right to
receive any payment from the Company as a result of the transactions pursuant to
this Agreement, and (b) the Company has no Knowledge that any executive officer
of the Company or any other management personnel of the Company having a title
of vice president or more senior is obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, that
obligates such person to provide services or render advice to any person other
than the Company or any of its Subsidiaries, or would limit (other than for the
benefit of the Company or any of its Subsidiaries) the freedom of such person to
engage in any line of business or to compete with any other person, in each such
case, with respect to any business currently conducted by the Company or its
Subsidiaries or reasonably related to the current business of the Company or its
Subsidiaries. No payments or obligations to make any payments by the Company to
any of its employees or consultants shall arise as a result of the execution and
delivery of this Agreement by the Company or the consummation of the
transactions contemplated hereby.
(n) Taxes.
(i) Tax Returns. The Company and each of its Subsidiaries has
filed or caused to be filed or will file or cause to be filed with the
appropriate taxing authorities on a timely basis all material Tax Returns that
are required to be filed by, or with respect to, the Company and each of its
Subsidiaries on or prior to the Initial Closing Date (taking into account any
extension of time to file granted to or on behalf of the Company or any of its
Subsidiaries). All such Tax Returns have been prepared in compliance with all
applicable laws and regulations and are true and accurate in all material
respects.
(ii) Payment of Taxes. All material Tax liabilities of the
Company and its Subsidiaries due and payable with respect to all taxable years
or other taxable periods (including portions thereof) ending on or prior to the
Balance Sheet Date have been, or prior to the Initial Closing Date will be, paid
or adequately disclosed as a liability on the Balance Sheet. All material Tax
liabilities of the Company and its Subsidiaries due and payable with respect to
all taxable years or taxable periods (including portions thereof) which did not
end prior to the day after the Balance Sheet Date and which end on or prior to
the Initial Closing Date have been, or prior to the Initial Closing Date will
be, paid.
(iii) Audit Matters. Section 3.01(n) of the Company's disclosure
letter sets forth (I) each taxable year or other taxable period of the Company
and its Subsidiaries for which an audit or other examination of Taxes by any
taxing authority is currently in progress or, to the knowledge of the Company,
threatened against or with respect to the Company or any of its Subsidiaries
that, if determined adversely to the Company or its Subsidiaries, would result
in a material Tax liability of the Company or its Subsidiaries after the Initial
Closing Date, and (II) the taxable years or other taxable periods of the Company
and its Subsidiaries which, for income tax purposes, will not be subject to the
normally applicable statute of limitations because of written waivers or
agreements given by the Company or its Subsidiaries. No deficiencies for Taxes
have been claimed, proposed or assessed by any taxing authority against any of
the Company and its Subsidiaries. The Company has delivered to the Principal
Purchaser complete and accurate copies of all examination reports and statements
of deficiencies assessed against or agreed to be the Company or any of its
Subsidiaries since December 31, 1997.
(iv) Other Tax Matters. Except as set forth in Section 3.01(n) of
the Company's disclosure letter attached hereto:
(1) neither the Company nor any of its Subsidiaries has made
any payments, nor is or may become obligated (under any contract or agreement
entered into on or before the Initial Closing Date) to make any payments, that
will be non-deductible under Section 162(m) or 280G of the Code (or any
analogous provisions of state, local or foreign Tax law);
(2) the Company and each of its Subsidiaries has withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party other than such Taxes which in the aggregate,
are not material, and all material Forms W-2 and 1099 required with respect
thereto have been properly completed and timely filed;
(3) there are no liens for material Taxes (other than
current Taxes not yet due and payable) upon the assets or properties of the
Company or any of its Subsidiaries;
(4) the Company and its Subsidiaries are entitled to each
Tax refund claimed or received by the Company or any Subsidiary on or prior to
the Initial Closing Date, except to the extent the disallowance of which would
not result in any material Tax liability or loss of a pending material Tax
refund claim;
(5) the Company and its Subsidiaries are not and will not
become liable for any material Taxes as a result of the consummation of the
transactions contemplated herein and such transactions will not create any
material gains or income, the taxation of which is deferred under Treasury
Regulation Sections 1.1502-13 (or any similar provision of state, local or
foreign law);
(6) neither the Company nor any of its Subsidiaries is a
party to any Tax allocation, sharing, or similar agreement under which the
Company or such Subsidiaries has any current or potential contractual obligation
to indemnify any other Person with respect to Taxes;
(7) the Company and each of its Subsidiaries has properly
accrued on its respective financial statements all material Tax liabilities
(determined in accordance with GAAP) and the amount so accrued is at least equal
to its respective liability for such Taxes; and
(8) neither the Company nor any of its Subsidiaries has any
liability for material Taxes arising as a result of the Company or any of its
Subsidiaries at any time being a member of an affiliated group (as defined in
section 1504(a) of the Code and any analogous combined, consolidated or unitary
group defined under state, local or foreign income Tax law) other than a group
the common parent of which is the Company or any of its Subsidiaries.
(o) Liabilities. Except as set forth in Section 3.01(o) of the
Company's disclosure letter, neither the Company nor any of its Subsidiaries has
any material claims, liabilities or indebtedness, contingent or otherwise,
required to be set forth on the Balance Sheet in accordance with generally
accepted accounting principles except as set forth in the Balance Sheet or
referred to in the footnotes thereto, and except for liabilities incurred
subsequent to the Balance Sheet Date in the ordinary course of business or, if
incurred outside of the ordinary course of business, liabilities that would not
have a material adverse effect on the Condition of the Company and its
Subsidiaries taken as a whole.
(p) Intellectual Properties.
(i) Section 3.01(p) of the Company's disclosure letter accurately
sets forth all of the following used, held for use or otherwise covering or
claiming any intellectual property rights used in connection with the business
of the Company or its Subsidiaries as currently conducted: (i) patents, patent
rights, and applications therefor; (ii) registered trademarks and registered
service marks, and applications therefor; and (iii) other material intellectual
property rights of any kind or nature, including without limitation copyrights,
trade secrets, trade names, know how and other proprietary rights and
information (all of the foregoing collectively the "OSI Intellectual Property").
(ii) The Company and its Subsidiaries own or possess adequate
licenses or other valid rights to use all OSI Intellectual Property, all
material computer software, all material collections of information (such as
data bases), used in the conduct of the Company's or any Subsidiary's business,
and the Company is unaware of any assertion or claim challenging the validity of
any of the foregoing which would have a material adverse effect on the Condition
of the Company and its Subsidiaries taken as a whole. To the Knowledge of the
Company, the conduct of the business of the Company and its Subsidiaries as
currently conducted does not conflict with, infringe or misappropriate in any
way any patent, patent right, license, trademark, trademark right, trade name,
trade name right, service xxxx, copyright or trade secret of any third party
that, individually or in the aggregate, would have a material adverse effect on
the Condition of the Company and its Subsidiaries taken as a whole. Except as
set forth in Section 3.01(p) of the Company's disclosure letter, neither the
Company nor any Subsidiary has received since December 10, 1999 any written
notices of, and is not aware of any facts that would be reasonably likely to
constitute, any infringement, misappropriation or conflict by the Company of any
intellectual property rights of any third party or the invalidity of any OSI
Intellectual Property (including, without limitation, any demand or request that
the Company or any Subsidiary license or cease and desist from using any rights
of any third party). Except as set forth in Section 3.01(p) of the Company's
disclosure letter neither the Company nor any Subsidiary has received since
December 10, 1999 any written notice of termination or expiration with respect
to any OSI Intellectual Property, any material computer software (other than
generally available mass market software) and any material collections of
information (such as data bases) used in the Company's business from the owner
thereof and the Company is unaware of any facts or circumstances that would be
reasonably likely to result in such a termination or expiration notice.
(q) Environmental Laws and Regulations. Except as set forth in Section
3.01(q) of the Company's disclosure letter (a) Hazardous Materials have not been
(i) generated, used, treated or stored on, or transported to or from, any
Company Property or (ii) Released or disposed of on or from any Company
Property, except, in the case of clauses (i) or (ii) in a manner which could not
reasonably be expected to give rise to material liabilities under Environmental
Law, (b) the Company and each of its Subsidiaries have complied and are in
compliance in all material respects with applicable Environmental Laws and the
requirements of any permits or orders issued under such Environmental Laws, and
(c) there are no past, pending or, to the Company's Knowledge, threatened claims
under Environmental Law against the Company or any of its Subsidiaries. For
purposes of this Agreement, the following terms shall have the following
meanings: (A) "Company Property" means any real property and improvements at any
time owned, leased, or operated by the Company or any of its affiliates,
Subsidiaries or any of their respective predecessors; (B) "Hazardous Materials"
means (i) any petroleum or petroleum products, radioactive materials or friable
asbestos and (ii) any chemicals, materials or substances defined as "hazardous
substances," under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et seq. ("CERCLA")
and (iii) all other materials or substances the Release of which is prohibited
or regulated or as to which liability may be imposed under Environmental Laws;
(C) "Environmental Law" means any federal, state or local statute, law, rule,
regulation, ordinance or code, contractual obligation or common law or other
legal requirement, in each case in effect and as amended as of the date hereof
and the Initial Closing Date, relating to the environment or Hazardous
Materials, including, without limitation, CERCLA; the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. Sections 6901 et seq.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Sections 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. Sections 2601 et seq.; the Clean Air Act, 42
U.S.C. Sections 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Sections
3808 et seq.; and (D) "Release" means disposing, discharging, injecting,
spilling, leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing and the like, into or upon any land or water or air, or otherwise
entering into the environment.
(r) Conduct of Business. Since the Balance Sheet Date, except (a) as
set forth in Section 3.01(r) of the Company's disclosure letter or (b) as
contemplated or expressly required or permitted by this Agreement, the Company
has not taken any action which, if taken subsequent to the execution of this
Agreement and on or prior to the Initial Closing Date, would constitute a
material breach of the Company's agreements set forth in Section 4.03 of this
Agreement.
(s) Broker's or Finder's Fee. Except as set forth in Section 3.01(s)
of the Company's disclosure letter and except for the fees and expenses to be
paid and/or reimbursed to the Principal Purchaser hereunder and under any
Transaction Documents, no agent, broker, Person or firm acting on behalf of the
Company is, or will be, entitled to any fee, commission or broker's or finder's
fees from any of the parties hereto, or from any Person controlling, controlled
by, or under common control with any of the parties hereto, in connection with
this Agreement or any of the transactions contemplated hereby.
(t) Collection and Portfolio Services Businesses. Since December 31,
2000, there has not been any change in the terms or conditions (including,
without limitation, pricing) under which the Company performs either debt
collection services or portfolio services that would be reasonably likely to
have a material adverse effect on the Condition of the Company and its
Subsidiaries taken as a whole. The Company is unaware of any facts that would be
reasonably likely to cause a material impairment in the expected realization
value of the Company's purchased portfolios taken as a whole.
(u) Affiliate Transactions. The Commission Filings, together with
Company's Form 10-K for the year ended December 31, 2000, a true and complete
copy of which has been provided to the Purchasers, disclose all understandings,
agreements or arrangements with any stockholder or its Affiliates which would be
required to be disclosed pursuant to Item 404 of Regulation S-K promulgated
under the Exchange Act, if an Annual Report on Form 10-K were made on the date
hereof.
(v) Insurance. (i) All of the Company's insurance policies which are
intended to cover miscellaneous professional liability claims against the
Company and its Subsidiaries, including claims related to the Fair Debt
Collection Practices Act and any state or local counterpart or equivalent, are
listed in Section 3.01(v) of the Company's disclosure letter, including the
limits and deductibles related thereto. (ii) All such policies are in full force
and effect.
(x) Disclosure. Except as set forth in Section 3.01(x) of the
Company's disclosure letter, this Agreement, the certificates and other
instruments attached hereto or delivered pursuant to this Agreement, the
Financial Statements, the Commission Filings, the Company's disclosure letter
and to the extent listed or described on the Company's disclosure letter, the
documents and statements in writing which have been supplied by or on behalf of
the Company in connection with the transactions contemplated by this Agreement,
when considered in their entirety, do not contain any untrue statement of a
material fact, or omit a material fact necessary to make the statements
contained herein or therein not misleading.
3.02 Representations and Warranties of Purchaser. Each Purchaser, severally
and not jointly, represents and warrants to the Company as of the date hereof
and as of the Initial Closing Date as follows:
(a) Due Organization and Power. Each of GPII-A and GPII is a limited
partnership duly organized and validly existing and (to the extent such concept
is applicable) in good standing under the laws of the State of Delaware. Each
other Purchaser is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation.
(b) Authorization and Validity of Agreement. Purchaser has all
requisite power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by Purchaser,
and the consummation by Purchaser of the transactions contemplated hereby, has
been duly authorized by Purchaser. No other action on the part of Purchaser (or
its partners, stockholders or members, as applicable) is necessary to authorize
the execution, delivery and performance of this Agreement by Purchaser and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Purchaser and, assuming the due execution and
delivery of this Agreement by the Company, is a valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms.
(c) Consents and Approvals; No Violations. Assuming that, with respect
to each applicable Closing, the filings, if any, required under the HSR Act are
made and the waiting period thereunder has been terminated or has expired, the
execution and delivery of this Agreement by Purchaser and the consummation by
Purchaser of the transactions contemplated hereby will not: (1) violate any
provision of the governing or charter instruments of Purchaser; (2) violate any
statute, ordinance, rule, regulation, order or decree of any court or of any
governmental or regulatory body, agency or authority applicable to Purchaser or
by which its properties or assets may be bound; (3) require any filing with, or
permit, consent or approval of, or the giving of any notice to any governmental
or regulatory body, agency or authority; or (4) result in a violation or breach
of, conflict with, constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under, or result in the creation of security interest, charge or
Encumbrance upon any of the properties or assets of Purchaser under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
franchise, permit, agreement, lease or other instrument or obligation to which
Purchaser is a party, or by which its properties or assets may be bound except
for in the case of clauses (3) and (4) above for such as would not prevent or
materially delay consummation of the transactions contemplated by this
Agreement.
(d) Litigation. There is no action, suit, proceeding at law or in
equity, or any arbitration or any administrative or other proceeding by or
before (or, to the Knowledge of Purchaser, any investigation by) any
governmental or other instrumentality or agency, pending or, to the Knowledge of
Purchaser, threatened, against or affecting Purchaser, or any of its properties
or rights, which would prevent or materially delay consummation of the
transactions contemplated by this Agreement.
(e) Broker's or Finder's Fee. No agent, broker, Person or firm acting
on behalf of Purchaser is, or will be, entitled to any fee, commission or
broker's or finder's fees from the Company in connection with this Agreement or
any of the transactions contemplated hereby.
(f) No Registration of Shares. Purchaser is aware that the Sale Shares
have not been registered under the Securities Act of 1933, as amended and the
rules and regulations promulgated thereunder (the "Securities Act"), that the
offer and sale are intended to be exempt from registration under the Securities
Act and the rules promulgated thereunder by the Commission, and that the Sale
Shares cannot be sold, assigned, transferred, or otherwise disposed of unless
they are subsequently registered under the Securities Act or an exemption from
such registration is available; provided, however, that that subject to the
contractual obligations of such Purchaser, the disposition of such Purchaser's
property shall at all times remain within the sole control of Purchaser.
Purchaser is also aware that sales or transfers of the Sale Shares are further
restricted by state securities laws and the provisions of the Stockholders
Agreement and that the certificates for the Sale Shares will bear appropriate
legends restricting their transfer pursuant to applicable laws and the
Stockholders Agreement.
(g) Suitability of Investment.
(i) Purchaser is acquiring the Sale Shares for its own account,
for investment purposes only and not with a view to the resale or distribution
thereof in violation of the Securities Act;
(ii) Purchaser has not and will not, directly or indirectly,
offer, sell, transfer, assign, exchange or otherwise dispose of all or any part
of the Sale Shares, except in accordance with applicable federal and state
securities laws and the Stockholders Agreement; provided, however, that subject
to the contractual obligations of such Purchaser, the disposition of such
Purchaser's property shall at all times remain within the sole control of
Purchaser;
(iii) Purchaser has such knowledge and experience in financial,
business and tax matters that it is capable of evaluating the merits and risks
relating to its investment in the Sale Shares and making an investment decision
with respect to the Company, and Purchaser has determined the Sale Shares are a
suitable investment for Purchaser and that Purchaser is able at this time, and
in the foreseeable future, to bear the economic risk of a total loss of its
investment in the Company;
(iv) Without limiting or modifying the Company's representations
and warranties set forth in Section 3.01 or otherwise delivered to the
Purchasers hereunder or the right of the Purchasers to rely thereon, to the full
satisfaction of Purchaser, Purchaser has been given the opportunity to obtain
information and documents relating to the Company and to ask questions of and
receive answers from representatives of the Company concerning the Company and
the investment in the Sale Shares and Purchaser has no Knowledge of any
information that would make the representations and warranties of the Company
set forth in this Agreement untrue;
(v) Neither Purchaser nor any of its affiliates has engaged in
any activity that would be deemed a "general solicitation" under the provisions
of Regulation D as promulgated under the Securities Act; and
(vi) Purchaser is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act as presently in
effect. If Purchaser is subject to ERISA, and is acquiring the Sale Shares as a
fiduciary or agent for another investor's account, Purchaser will have sole
investment and voting discretion with respect to such account and will have full
power to make the acknowledgements, representations and agreements contained
herein on behalf of such account.
ARTICLE IV
TRANSACTIONS PRIOR TO INITIAL CLOSING
4.01 Access to Information Concerning Properties and Records. During the
period commencing on the date hereof and ending on the Initial Closing Date, the
Company shall, and shall cause each of its Subsidiaries to, upon reasonable
notice, (i) afford the Purchasers, and their counsel, accountants, funding
sources, consultants and other authorized representative (collectively,
"Purchasers' Representatives"), full access during normal business hours to the
employees, properties, books and records of the Company and its Subsidiaries in
order that they may have the opportunity to make such investigations as they
shall desire of the affairs of the Company and its Subsidiaries; (ii) furnish to
the Purchasers and the Purchasers' Representatives such financial, legal,
technical, personnel and operating data and other information as such Persons
may reasonably request; and (iii) instruct the Company's employees, counsel,
auditors and financial and industry advisors to cooperate with the Purchasers
and the Purchasers' Representatives in their activities reasonably related to
consummating the transactions contemplated hereby; provided, that such
investigation and assistance shall not unreasonably disrupt the personnel and
operations of the Company and its Subsidiaries. In addition, for each month
prior to the Initial Closing beginning with January, 2001, the Company shall
provide the Purchasers with an unaudited consolidated balance sheet and the
related unaudited consolidated statement of operations, changes in stockholders'
equity and cash flows for the month then ended when and as such statements are
made available to Madison Dearborn Capital Partners III, L.P. (the "Monthly
Financial Statements"). The Monthly Financial Statements, except as indicated
therein, shall be prepared in accordance with GAAP applied on a basis consistent
with the Financial Statements except that they need not contain footnotes and
will be subject to year end adjustments.
4.02 Confidentiality. Information obtained by the Principal Purchaser
pursuant to Section 4.01 hereof shall be subject to the provisions of the
Confidentiality Agreement dated March 2, 2001 between the Company and Principal
Purchaser (the "Confidentiality Agreement").
4.03 Conduct of the Business of the Company Pending the Initial Closing.
The Company agrees that, except as set forth in Section 4.03 of the Company's
disclosure letter and except as permitted, required or contemplated by, or
otherwise described in, this Agreement or otherwise consented to or approved by
the Principal Purchaser in writing, during the period commencing on the date
hereof and ending on the Initial Closing Date:
(a) The Company and each of its Subsidiaries will conduct their
respective operations in the ordinary and usual course of business and will use
their reasonably best efforts to preserve intact their respective business
organization, keep available the services of their officers and employees and
maintain satisfactory relationships with licensors, suppliers, distributors,
clients, joint venture partners, and others having business relationships with
them; and
(b) Neither the Company nor any of its Subsidiaries shall (i) make any
change in or amendment to its Certificate of Incorporation or By-Laws (or
comparable governing documents); (ii) issue or sell any shares of its capital
stock (other than in connection with the exercise of convertible or exercisable
securities outstanding on the date hereof) or any of its other securities, or
issue or grant any securities convertible into, or options, warrants or rights
to purchase or subscribe to, or enter into any arrangement or contract with
respect to the issuance or sale of, any shares of its capital stock or any of
its other securities, or make any other changes in its capital structure; (iii)
sell or pledge or agree to sell or pledge any stock owned by it in any of its
Subsidiaries; (iv) declare, pay, set aside or make any dividend or other
distribution or payment with respect to, or split, combine, redeem or
reclassify, or purchase or otherwise acquire any shares of its capital stock or
its other securities; (v) cancel or materially amend, modify or supplement or
cancel any Material Contract or release or relinquish any material rights under
any Material Contract without written notice thereof to the Principal Purchaser
prior to or concurrently with such action; (vi) transfer, lease, license,
guarantee, sell, mortgage, pledge, dispose of, encumber or subject to any lien,
any material assets or incur or modify any indebtedness or other liability;
(vii) make any change in its method of accounting other than such changes as may
be necessary or advisable to comply with applicable law or regulation or with
generally accepted accounting principals after prior notice to the Purchasers;
(viii) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries not constituting an inactive Subsidiary
(other than the transactions contemplated in this Agreement); or (ix) agree, in
writing or otherwise, to take any of the foregoing actions; provided, however,
the Company may take any action reasonably necessary to effectuate the payment
of payment-in-kind dividends to the holders of the Preferred Stock, in
accordance with the terms of the Preferred Stock.
4.04 Reasonable Best Efforts.
(a) Subject to the terms and conditions provided herein, the Company
and each Purchaser shall, and the Company shall cause each of its Subsidiaries
to, cooperate and use their respective reasonable best efforts to take, or cause
to be taken, all appropriate action, and to make, or cause to be made, all
filings necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, the Company shall use its
reasonable best efforts to (x) obtain, prior to the Initial Closing Date, all
licenses, permits, consents, waivers, approvals, authorizations, qualifications
and orders of governmental authorities and parties to contracts with the Company
and its Subsidiaries as are necessary for consummation of the transactions
contemplated by this Agreement and Purchaser shall cooperate with, and use its
reasonable best efforts to assist, the Company with respect thereto and (z)
obtain the waiver, extension and modification as contemplated in Section 5.03(f)
in the form reasonably requested or approved by Purchaser and reasonably
acceptable to the Company. The Company shall submit to the stockholders of the
Company for approval the Certificate Amendment and, assuming that such requisite
approval is obtained, on or prior to the Initial Closing the Company shall cause
such Certificate Amendment to be duly filed and recorded with and certified by
the Secretary of State of the State of Delaware and to be in full force and
effect as of the Initial Closing Date.
(b) Prior to the Initial Closing, the Company and each of its
Subsidiaries shall take all actions that are required to be taken prior to the
Initial Closing to ensure that each License shall remain in effect in all
material respects upon consummation of the transactions contemplated hereby and
will use their reasonable best efforts to respond to requests and inquiries from
regulatory agencies regarding Licenses. Without limiting the foregoing, the
Company and each of its Subsidiaries shall use their reasonable best efforts to
comply with all notice, application, and change in control provisions associated
with any License that requires any action to be taken prior to the Initial
Closing and to notify the Purchasers of any and all conditions of which the
Company is aware with which Purchasers and/or the Company must comply to
maintain in all material respects each License with no gap in the coverage of
any License, and each of the Company and the Purchasers shall cooperate fully
with each other to ensure such compliance. Such notice to the Purchasers shall,
to the extent practicable, be given sufficiently in advance of the Initial
Closing to permit compliance with all applicable notice, application and change
in control provisions associated with each License.
4.05 Exclusive Dealing. During the period from the date of this Agreement
to the earlier of the termination of this Agreement and the Initial Closing,
neither the Company nor any Stockholder shall take, and they shall not permit
any of their respective affiliates, officers, directors, agents, advisors,
attorneys, or accountants or financing sources to take, any action to, directly
or indirectly, encourage, initiate, solicit or engage in discussions or
negotiations with, or provide any information to, any Person, other than the
Principal Purchaser and its representatives, concerning (i) any issuance of any
capital stock of the Company or its Subsidiaries (other than in connection with
the exercise of options, warrants or other convertible securities outstanding on
the date hereof) at a price per share that would trigger any preemptive or
similar rights pursuant to Section 7 of the Stockholders Agreement assuming that
the Stockholders Agreement was then effective, or (ii) any merger, asset sale,
recapitalization or similar transaction involving the Company or its
Subsidiaries. The Company will not solicit the consent of its stockholders to
vote their stock in the Company, and the Company will not vote the capital stock
of any of its Subsidiaries, in favor of any such purchase of any capital stock
of the Company, or any merger, asset sale or similar transaction. The Company
will notify the Principal Purchaser as soon as practicable if any Person makes
any proposal, offer, inquiry, or contact to the Company with respect to the
foregoing and shall describe in reasonable detail the identity of such Person
and, the substance and material terms of any such contact and the material terms
of any such proposal.
4.06 Notification of Certain Matters. The Company shall give prompt notice
to the Purchasers of the existence of any fact or circumstance of which the
Company becomes aware which would cause any representation or warranty made by
it contained in this Agreement to be untrue in any material respect or would
result in the failure of any condition precedent set forth in Article V at any
time from the date of this Agreement to the Initial Closing Date. The Company
and each Purchaser shall give prompt notice to the other parties of any notice
or other communication from, any third party alleging that the consent of such
third party is or may be required in connection with the transactions
contemplated by this Agreement.
4.07 HSR. Each party shall file or cause to be filed, as promptly as
practicable, with the Federal Trade Commission and the United States Department
of Justice, all reports and other documents required to be filed by such party
under the HSR Act concerning the transactions contemplated hereby and shall
promptly comply with or cause to be complied with any requests made to such
party by the Federal Trade Commission or the United States Department of Justice
for additional information concerning such transactions, in each case so that
any waiting period applicable to this Agreement and the transactions
contemplated hereby under the HSR Act shall expire as soon as practicable. Each
party agrees to request, and to cooperate with the other parties in requesting,
early termination of any applicable waiting period under the HSR Act. The
Principal Purchaser shall be responsible for any filing fees incurred by the
Principal Purchaser in connection with the filings required under the HSR Act.
ARTICLE V
CONDITIONS PRECEDENT TO SALE OF STOCK
5.01 Conditions to Each Party's Obligations. The respective obligations of
each party to effect the transactions contemplated hereby shall be subject to
the fulfillment or waiver at or prior to each Closing of the following
conditions:
(a) No Injunction. No preliminary injunction, or decree, or other
order shall have been issued by any court or by any governmental or regulatory
agency, body or authority which prohibits the consummation of the transactions
contemplated by this Agreement which is in effect at the Closing; provided,
however, that, in the case of any such injunction, decree or other order, each
of the parties hereto shall have used reasonable best efforts to prevent the
entry of any such decree, injunction or other order and to appeal as promptly as
possible any such decree, injunction or other order that may be entered.
(b) Statutes. No statute, rule, regulation, executive order, decree or
order of any kind shall have been enacted, entered, promulgated or enforced by
any court or governmental authority which prohibits the consummation of the
transactions contemplated hereby.
(c) HSR Act. Any waiting period applicable to the sale of the Sale
Shares at the Closing under the HSR Act shall have expired, or earlier
termination thereof shall have been granted, and no action shall have been
instituted by either the United States Department of Justice or the Federal
Trade Commission to prevent the consummation of the transactions contemplated by
this Agreement at the Closing or to modify or amend such transactions in any
material manner or, if any such action shall have been instituted, it shall have
been withdrawn or a final judgment shall have been entered against such
Department or Commission, as the case may be.
5.02 Conditions to Obligations of the Company. The obligation of the
Company to effect the sale of the Sale Shares and to effect the other
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Initial Closing of the following additional conditions, any one or more
of which may be waived by the Company:
(a) Purchaser Representations and Warranties. The representations and
warranties of the Purchasers contained in this Agreement which are qualified as
to "materiality" or "material adverse effect" shall be true and correct in all
respects and the representations and warranties of the Purchasers which are not
so qualified shall be true and correct in all material respects, in each case as
of the date hereof and as of the Initial Closing with the same effect as though
such representations and warranties had been made on and as of such date.
(b) Performance by Purchaser. The Purchasers shall have performed and
complied in all material respects with all of the covenants and agreements and
satisfied in all material respects all of the conditions required by this
Agreement to be performed or complied with or satisfied by the Purchasers at or
prior to the Initial Closing.
(c) Transaction Documents. The Purchasers shall each have executed and
delivered the Transactions Documents to which they are parties.
5.03 Conditions to Obligations of the Purchasers. The obligations of each
Purchaser to effect the purchase of the Sale Shares and to effect the other
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Initial Closing of the following additional conditions, any one or more
of which may be waived by such Purchaser as to such Purchaser's obligations
hereunder:
(a) Representations and Warranties. The representations and warranties
of the Company contained in this Agreement which are qualified as to
"materiality" or "material adverse effect" shall be true and correct in all
respects and the representations and warranties of the Company which are not so
qualified shall be true and correct in all material respects as of the date
hereof and as of the Initial Closing with the same effect as though such
representations and warranties had been made on and as of such date.
(b) Performance. The Company shall have performed and complied in all
material respects with all the covenants and agreements and satisfied in all
material respects all the conditions required by this Agreement to be performed
or complied with or satisfied by such parties at or prior to the Initial
Closing.
(c) No Material Adverse Change. There shall have not occurred after
the date hereof any material adverse change in the Condition of the Company and
its Subsidiaries taken as a whole.
(d) Certificate. The Company shall have delivered, or caused to be
delivered, at the Initial Closing to the Purchasers a certificate executed on
its behalf by its duly authorized officer in their corporate capacity to the
effect that the conditions set forth in Subsections 5.03(a), 5.03(b) and
5.03(c), above, have been satisfied.
(e) Transaction Documents. (i) The Company and each other Purchaser
shall each have executed and delivered the Transactions Documents to which they
are parties, and (ii) the Stockholders Agreement and the Registration Rights
Agreement shall have been duly executed and delivered by the requisite parties
thereto such that the Stockholders Agreement dated December 10, 1999 by and
among the Company, Madison Dearborn Capital Partners III, L.P. and certain other
stockholders of the Company and the Registration Rights Agreement dated December
10, 1999 by and among the Company, Madison Dearborn Capital Partners III, L.P.
and certain other stockholders of the Company shall each have been amended,
restated and superseded in its entirety by the Stockholders Agreement and the
Registration Rights Agreement, respectively.
(f) Material Consents. The Company and its Subsidiaries shall have
procured: (1) a duly obtained waiver in a form reasonably acceptable to the
Principal Purchaser under the DLJ Credit Agreement providing that the
consummation of the transactions contemplated hereby shall not violate the DLJ
Credit Agreement and waiving the Company's obligation thereunder to deliver to
the lenders thereunder any portion of any of the payments made hereunder by the
Purchasers to the Company in respect of their purchase of Sale Shares at any
Closing, (2) a waiver by the parties to the Stockholders Agreement of any
preemptive rights or rights of first refusal that may arise under the
Stockholders Agreement with respect to any issuance hereunder at any Closing of
any Sale Shares, and (3) all other third party consents necessary to consummate
the transactions contemplated hereby that, if not obtained, would have a
material adverse effect on the Condition of the Company and its Subsidiaries,
taken as a whole.
(g) Participation by Other Purchasers. With respect only to the
Principal Purchaser, Purchasers (other than the Principal Purchaser) shall
purchase a total of 81,632.65 Sale Shares at the Initial Closing.
(h) Opinion of Counsel. The Purchasers shall have received an opinion
of Xxxxxxxx & Xxxxx, counsel to the Company, in substantially the form of
Exhibit F.
(i) Board of Directors. A representative of the Principal Purchaser
shall have been duly elected to the Board of Directors of the Company effective
immediately following the Initial Closing and such representative shall have
been given an opportunity to execute and deliver, and the Company shall have
offered to execute and deliver to such representative, an indemnification
agreement with respect to such person's services as a director in the Company's
standard form.
(j) Certificate Amendment. The Certificate Amendment shall have been
filed with and certified by the Secretary of State of the State of Delaware.
ARTICLE VI
CERTAIN ADDITIONAL MATTERS
6.01 Survival, Etc. All representations and warranties in Sections 3.01 and
3.02 of this Agreement (as modified by the Company's disclosure letter) shall
survive the Initial Closing until the date that is 12 months after the Initial
Closing Date; provided, however, that with respect to the representations and
warranties set forth in Sections 3.01(c)(ii), (f)(ii), (g), (h), (i), (j)(ii),
(k), (l), (m), (n), (p), (q), (r), (s), (t), (u), (v)(ii) and (x) and Section
3.02(d) and (e), such representations and warranties shall survive only with
respect to any breach of any such representation or warranty of which the
breaching party had Knowledge. Except as otherwise set forth in Section
3.02(g)(iv), any rights or remedies based on such representations and warranties
will not be affected by any investigation conducted with respect to, or any
knowledge capable of being acquired at any time, whether before or after the
execution and delivery of this Agreement or the Initial Closing, with respect
to, any such representation or warranty. The waiver of any condition based on
the accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect any rights or
remedies based on such representations, warranties, covenants and obligations,
unless the related written waiver expressly so provides. The termination of the
representations and warranties provided herein shall not affect the rights of a
party in respect of any claim made by such party in a writing received by the
other party prior to the expiration of the applicable survival period provided
herein.
6.02. Finders Fees.
(a) Subject to the terms and conditions of this Section 6.02(a), if
the Company completes an Acquisition which Gryphon Advisors II, LLC (or an
affiliate) ("Gryphon") introduced to the Company and/or any of its affiliates or
representatives, the Company shall pay Gryphon a fee equal to 2% of the
Transaction Value and reimburse Gryphon for any and all out-of-pocket expenses
incurred by Gryphon and/or its affiliates in connection with such Acquisition.
The Company's obligations to pay such fee and expense reimbursement are subject
to the conditions that (i) the applicable Acquisition is completed on or prior
to the first anniversary date of such introduction, and (ii) such introduction
is not made at a time that the business that is the subject of such Acquisition
is conducting or has announced to potential purchasers an auction with respect
to the sale of such business and such auction is being conducted by an
investment banking firm that has been retained by the seller of such business
and such investment bank is actively soliciting offers and participation in such
auction. Such fee and expense reimbursement shall be due and payable, in
immediately available funds by wire transfer, concurrently with the closing of
the Acquisition, provided that if, by virtue of an "earn out" or other similar
contingent consideration, the Transaction Value is subject to future upward
adjustment, the fee with respect to such additional Transaction Value shall be
paid promptly after any future payments of contingent consideration.
(b) An "Acquisition" shall mean the purchase by the Company and/or any
of its affiliates, by stock purchase, merger, consolidation, recapitalization or
acquisition of assets, of any business. "Transaction Value" shall mean the total
fair market value (at the time of closing) of all consideration (including cash,
securities, property and the principal amount of all indebtedness (including
bank debt) and capital leases that are assumed or paid by the Company or any of
its Subsidiaries) paid or payable, or otherwise to be distributed, directly or
indirectly, to the acquired company or its shareholders in connection with the
Acquisition. If the Acquisition takes the form of a recapitalization or similar
transaction, "Transaction Value" will also include the value of all shares
retained by the shareholders of the acquired company. Any acts taken by Gryphon
with respect to the foregoing shall be on a non-exclusive basis. Gryphon's sole
responsibility will be to introduce the Company and/or its affiliates or
representatives to a prospective Acquisition candidate, and Gryphon will not
negotiate with any such prospective Acquisition candidate on behalf of the
Company and/or its affiliates or representatives.
6.03 Board Observer Rights; Certain Information Rights.
(a) Without limiting any of the Principal Purchaser's rights under any
of the Transaction Documents, the Principal Purchaser shall have the right to
designate a representative to attend all meetings of the Company's Board of
Directors and all meetings of any committees of the Company's Board of Directors
in each case in a non-voting observer capacity (the "Gryphon Observer"), and, in
this respect, the Company shall give the Principal Purchaser and the Gryphon
Observer copies of all notices, minutes, consents and other materials that it
provides to its directors; provided, however, that (i) the Principal Purchaser
agrees, and any Gryphon Observer will agree, to hold in confidence all
information so provided and not to use or disclose any confidential information
provided to or learned by it in connection with its rights under this Agreement,
and (ii) that the board observation rights pursuant to this Section 6.03(a)
shall be temporarily suspended with respect to any portion of a meeting if, in
the opinion of counsel of the Company, the Gryphon Observer's attendance at such
portion of the meeting could violate any member of the Board of Directors'
fiduciary duty, any confidentiality obligation or any attorney-client privilege
that may exist in connection with such meeting. The board observation rights
pursuant to this Section 6.03(a) shall terminate on the first date on which the
Principal Purchaser (together with its affiliated funds) owns collectively less
than 25% of the Sale Shares owned by the Principal Purchaser as of the Initial
Closing Date.
(b) The Company agrees that GPII shall have at all times during which
it owns any interest in the stock of the Company, the right to consult with and
advise management of the Company on significant business issues, including
management's proposed annual operating plans and to meet with the Company's
management at the Company's facilities at mutually agreeable times for such
consultation and advice and to review progress in achieving such plans, and in
connection therewith, (i) to inspect and copy the books and records of the
Company; (ii) to inspect the Company's properties; (iii) to receive and review
the Company's financial statements; (iv) to receive materials sent by the
Company to the Company's board of directors, and (v) otherwise to routinely to
consult with and advise the management of the Company on matters relating to the
Company's business and affairs.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.01 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned, at any time prior to the Initial Closing:
(a) by mutual consent of the Company and the Principal Purchaser;
(b) by the Company or the Principal Purchaser if the transactions
contemplated hereby to be consummated at the Initial Closing shall not have been
consummated on or before April 30, 2001 (or such later date as may be agreed to
in writing by the Company and the Principal Purchaser), by reason of the failure
of any condition to the consummation of the transactions contemplated hereby at
such Initial Closing which must be fulfilled to its satisfaction; provided that
no party may terminate this Agreement under this Section 7.01(b) if such failure
has been caused primarily by such party's material breach of this Agreement;
(c) by the Company prior to the Initial Closing if (a) there are any
inaccuracies, misrepresentations or breaches of the Principal Purchaser's
representations or warranties in this Agreement, such that the condition set
forth in Section 5.02(a) to the Company's obligation to effect the transactions
contemplated hereby cannot be met in connection with the Initial Closing, or (b)
the Principal Purchaser has breached or failed to perform in all material
respects any of its material covenants or agreements contained herein as to
which notice has been given to the Principal Purchaser and the Principal
Purchaser has failed to cure or otherwise resolve the same to the reasonable
satisfaction of the Company within fifteen (15) days after receipt of such
notice;
(d) by the Principal Purchaser prior to the Initial Closing if (a)
there are any inaccuracies, misrepresentations or breaches of any of the
Company's representations or warranties in this Agreement, such that the
condition set forth in Section 5.03(a) to the Principal Purchaser's obligation
to effect the transactions contemplated hereby cannot be met in connection with
the Initial Closing, or (b) the Company has breached or failed to perform in all
material respects any of their material covenants or agreements contained herein
as to which notice has been given to the Company and the Company has failed to
cure or otherwise resolve the same to the reasonable satisfaction of the
Principal Purchaser within fifteen (15) days after receipt of such notice; or
(e) by the Company or the Principal Purchaser if a court of competent
jurisdiction or other governmental body shall have issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise prohibiting
the transactions contemplated hereby and such order, decree, ruling or other
action shall have become final and nonappealable.
7.02 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.01 hereof by the Principal Purchaser or the
Company, written notice thereof shall forthwith be given to the other party or
parties specifying the provision hereof pursuant to which such termination is
made, this Agreement shall be void and have no effect, and there shall be no
liability hereunder on the part of any party hereto, except that Sections 4.02,
8.01, 8.13 and this Section 7.02 hereof shall survive any termination of this
Agreement. Nothing in this Section 7.02 shall relieve any party to this
Agreement of liability for breach of this Agreement. Nothing in this Article VII
is intended to limit any party's right to terminate this Agreement pursuant to
Section 1.02.
ARTICLE VIII
MISCELLANEOUS
8.01 Fees and Expenses. All costs and expenses incurred in connection with
this Agreement and the consummation of the transactions contemplated hereby
shall be paid by the party incurring such costs and expenses; provided, that:
(a) the Company shall reimburse Principal Purchaser for (i) 100% of
the previously unreimbursed Principal Purchaser's Transaction Expenses (as
defined below) up to an aggregate maximum reimbursement of $200,000, and (ii)
50% of all of the Principal Purchaser's Transaction Expenses in excess of such
initial $200,000 reimbursed amount;
(b) the Company shall pay to Gryphon at the Initial Closing a
transaction fee equal to 4.0% of the aggregate payment made by the Principal
Purchaser in respect of the Principal Purchaser's purchase of Sale Shares at the
Initial Closing.
(c) the Company shall pay to Gryphon at each Subsequent Closing a
transaction fee equal to 3.0% of the aggregate payment made by the Principal
Purchaser in respect of the Principal Purchaser's purchase of Sale Shares at
each such Subsequent Closing.
Such amounts shall be paid at the applicable Closing (and in the case of
clause (a), at the Initial Closing) to the extent not previously reimbursed or
paid. For purposes of this Section 8.01, the "Principal Purchaser's Transaction
Expenses" shall mean the reasonable out of pocket expenses, including the
reasonable fees and expenses of third parties, incurred by the Principal
Purchaser in connection with and related to the transactions contemplated
hereunder during the period up to and including the Initial Closing Date.
8.02 Transfer Taxes. Except as provided herein, all transfer, sales and
use, registration, stamp and similar Taxes imposed in connection with any
transaction that occurs pursuant to this Agreement shall be borne solely by the
Company.
8.03 Extension; Waiver. At any time prior to a Closing, the Principal
Purchaser (on the one hand) and, the Company (on the other hand) may (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein by any other applicable party or in any document,
certificate or writing delivered pursuant hereto by any other applicable party
or (iii) waive compliance with any of the agreements or conditions contained
herein; provided, that no such extension or waiver which adversely affects the
rights and obligations of any Purchaser in a manner that does not equally affect
all similarly situated Purchasers may be made without the approval of each
Purchaser so affected. Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by the party to be bound thereby. Any
waiver of any term or condition shall not be construed as a waiver of any
subsequent breach or a subsequent waiver of the same term or condition, or a
waiver of any other term or condition, of this Agreement. The failure of any
party to assert any of its rights hereunder shall not constitute a waiver of any
of such rights.
8.04 Public Announcements. The Company, on the one hand, and Principal
Purchaser, on the other hand, agree to consult promptly with each other prior to
issuing any press release or otherwise making any public statement with respect
to the transactions contemplated hereby, and shall not issue any such press
release or make any such public statement prior to such consultation and review
by the other party of a copy of such release or statement, unless required by
applicable law, including without limitation the rules and regulations of the
Commission. No Purchaser other than the Principal Purchaser shall make or issue
any such statement or release without the prior approval of the Principal
Purchaser and the Company.
8.05 Indemnification. From and after the Initial Closing, the Company
shall, and each Purchaser shall vote its shares in the Company to, maintain in
effect in the Certificate of Incorporation of the Company the provisions with
respect to indemnification set forth in Article Eighth of the Certificate of
Incorporation of the Company and the corresponding provisions in the Bylaws of
the Company, each as in effect at the Initial Closing, which provisions shall
not be amended, repealed or otherwise modified in any manner that would
adversely affect the rights thereunder of individuals (or their estates) who at
the date of this Agreement and/or as of the Initial Closing or immediately
following the Initial Closing are or were directors, officers, employees or
agents of the Company or its Subsidiaries, unless such amendment or modification
is required by law or is consented to in writing by holders of a majority of the
Sale Shares. This Section 8.05 shall terminate on the earlier of (i) the sixth
anniversary of the Initial Closing Date, and (ii) the first date following the
Initial Closing Date (or, if later, the date on which a designee of GPII or
GPII-A is first elected or appointed to the Board of Directors of the Company)
on which no individual designated by either GPII or GPII-A is an elected member
of the Board of Directors of the Company.
8.06 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing addressed as follows:
(a) if to the Company, to it at:
000 Xxxxx Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx
General Counsel
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
(b) if to Principal Purchaser, to it at:
Gryphon Partners II, L.P.
Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
(c) if to any other Purchaser, to the address set forth opposite each
of their names on the signature pages hereto, or to such other Person or address
as any party shall specify by notice in writing to each of the other parties.
(d) Any such notice shall be deemed to have been received by the
addressee (i) when received if personally delivered to the addressee's address
as specified above, (ii) upon electronic confirmation of receipt, if transmitted
by telecopy and confirmed by a copy sent for next day delivery to a domestic
address by a nationally recognized overnight delivery service (e.g., Federal
Express); provided that if transmitted by telecopy after 5:00 p.m. local time
for the recipient, then deemed receipt shall be on the next business day, (iii)
the day after it is sent, if sent for next day delivery to a domestic address by
a nationally recognized overnight delivery service, and (iv) three days from the
date of deposit in the U.S. mails, if sent by certified or registered U.S. mail,
return receipt requested; provided, however, that a notice of a change of
address shall be effective only upon receipt thereof.
8.07 Entire Agreement. This Agreement and the Exhibits, the Company's
disclosure letter and other documents referred to herein or delivered pursuant
hereto and the Confidentiality Agreement collectively contain the entire
understanding of the parties hereto with respect to the subject matter contained
herein and supersede all prior agreements and understandings, oral and written,
with respect thereto.
8.08 Binding Effect; Benefit; Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties. Nothing
in this Agreement, expressed or implied, is intended to confer on any Person
other than the parties hereto or their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement except for Section 8.06 which shall inure to, and be enforceable
by, the intended beneficiaries thereof.
8.09 Amendment and Modification. This Agreement may not be amended,
modified and supplemented except in writing executed by the (i) Company, (ii)
the Principal Purchaser and (iii) the Purchasers (other than the Principal
Purchaser) representing at least 50% of the Sale Shares purchased or to be
purchased by such Purchasers (other than the Principal Purchaser) hereunder.
8.10 Headings. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only, do not constitute
a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement.
8.11 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, and all of which together shall
be deemed to be one and the same instrument.
8.12 Applicable Law. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the laws of
the State of New York, without regard to the conflict of laws rules thereof.
Each of the parties hereto hereby irrevocably acknowledges and consents that any
legal action or proceeding brought with respect to any of the obligations
arising under or relating to this Agreement shall be brought in the United
States District Court for the Northern District of Illinois, or, if such courts
do not have jurisdiction over such claims, in the courts of the State of
Illinois as the party bringing such action or proceeding may elect, and each of
the parties hereto hereby irrevocably submits to and accepts with regard to any
such action or proceeding, for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. The foregoing
shall not limit the rights of any party to serve process in any other manner
permitted by law. The foregoing consents to jurisdiction shall not constitute
general consents to service of process in the State of Illinois for any purpose
except as provided above and shall not be deemed to confer rights on any Person
other than the respective parties to this Agreement. To the fullest extent
permitted by applicable law, each of the parties hereto hereby irrevocably
waives the objection which it may now or hereafter have to the laying of the
venue of any suit, action or proceeding arising out of or relating to this
Agreement in any of the courts referred to above and hereby further irrevocably
waives any claim that any such court is not a convenient forum for any such
suit, action or proceeding.
8.13 Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
8.14 Certain Definitions.
(a) "Person" shall mean and include an individual, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, a group
and a government or other department or agency thereof.
(b) "Subsidiary," with respect to the Company, shall mean and include
(x) any partnership of which the Company or any Subsidiary is a general partner
or (y) any other entity in which the Company or any of its Subsidiaries owns or
has the power to vote 50% or more of the equity interests in such entity having
general voting power to participate in the election of the governing body of
such entity, in each case, including without limitation, the Subsidiaries set
forth on Schedule 3.01(c)(ii) of the Company's disclosure letter.
(c) "Knowledge" shall mean, with regard to any natural person, the
actual knowledge of such person; and with regard to any party hereto, the actual
knowledge of the executive officers of such party; provided, however, that with
respect to (i) the Company, "Knowledge" shall mean the actual knowledge of
Xxxxxxx X. Xxxxx, Xxxx X. Xxxxxx, Xxxxx X. Xxxxxxx, and Xxxx X. Xxxxx; and (ii)
GPII and GPII-A, "Knowledge"shall mean the actual knowledge of R. Xxxxx Xxxxxxx
and Xxxxxxx Xxxx.
(d) A "business day" shall mean, any day, other than a Saturday,
Sunday or a day on which banks located in Chicago, Illinois shall be authorized
or required by law to close.
(e) "Tax" or "Taxes" means any federal, state, local or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.
(f) "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their respective behalf, by their respective officers thereunto
duly authorized, all as of the date first above written.
THE COMPANY: OUTSOURCING SOLUTIONS INC.
By:/s/ Xxxxxxx X. Xxxxx
-----------------------
Name: Xxxxxxx X. Xxxxx
Title: President
PURCHASERS: GRYPHON PARTNERS II, L.P.,
a Delaware limited partnership
By: Gryphon GenPar II, LLC
Its: General Partner
By:/s/ R. Xxxxx Xxxxxxx
--------------------
Name: R. Xxxxx Xxxxxxx
Title: President
GRYPHON PARTNERS II-A, L.P.,
a Delaware limited partnership
By: Gryphon GenPar II, LLC
Its: General Partner
By:/s/ R. Xxxxx Xxxxxxx
--------------------
Name: R. Xxxxx Xxxxxxx
Title: President
MADISON DEARBORN CAPITAL PARTNERS III, L.P.
By: Madison Dearborn Partners III, L.P.
Its: General Partner
By: Madison Dearborn Partners, Inc.
Its: General Partner
By:/s/ Xxxx X. Xxxx
---------------------------
Name: Xxxx X. Xxxx
Title: Managing Director
Address for Notice:
Madison Dearborn Capital Partners III, L.P.
-------------------------------------------
Three First National Plaza, Xxxxx 3800
-------------------------------------------
Xxxxxxx, XX 00000
-------------------------------------------
Attention: Xxxxxxx Xxxx
------------------
Phone: (000) 000-0000
------------------
Fax: (000) 000-0000
------------------
With a Copy to:
Xxxxxxxx & Xxxxx
---------------------
000 X. Xxxxxxxx Xxxxx
---------------------
Xxxxxxx, XX 00000
---------------------
Attention: Xxxxxxx X. Xxxxxx
------------------
Phone: (000) 000-0000
------------------
Fax: (000) 000-0000
------------------
XXXXXX CAPITAL PRIVATE EQUITY FUND III, L.P.
By: Xxxxxx Capital Management, LLC
Its: Investment Manager
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------
Xxxxxxx X. Xxxxxx
Its: Managing Director
Address for Notice:
c/o Abbott Capital Management, LLC
----------------------------------
1330 Avenue of the Americas
----------------------------------
Xxx Xxxx, XX 00000
----------------------------------
Attention: Xxxxxxx X. Xxxxxx
------------------
Phone: (000) 000-0000
------------------
Fax: (000) 000-0000
------------------
With a Copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx
--------------------------
000 Xxxx Xxxxxx
--------------------------
Xxxxxx, XX 00000
--------------------------
Attention: Xxxx Xxxxxxxxx
------------------
Phone: (000) 000-0000
------------------
Fax: (000) 000-0000
------------------
BNY PARTNERS FUND L.L.C.
By: BNY Private Investment Management, Inc.
Its: Member Manager
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
Its: Senior Vice President
Address for Notice:
c/o Abbott Capital Management, LLC
----------------------------------
1330 Avenue of the Americas
----------------------------------
Xxx Xxxx, XX 00000
----------------------------------
Attention: Xxxxxxx X. Xxxxxx
------------------
Phone: (000) 000-0000
------------------
Fax: (000) 000-0000
------------------
With a Copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx
--------------------------
000 Xxxx Xxxxxx
--------------------------
Xxxxxx, XX 00000
--------------------------
Attention: Xxxx Xxxxxxxxx
------------------
Phone: (000) 000-0000
------------------
Fax: (000) 000-0000
------------------
DB CAPITAL INVESTORS, L.P.
By: DB Capital Partners, L.P.
Its: General Partner
By: DB Capital Partners, Inc.
By: /s/ Xxx X. Xxxxxxx
--------------------
Name: Xxx X. Xxxxxxx
Its: Vice President
Address for Notice:
000 Xxxxxxx Xx.
--------------------
Xxx Xxxx, XX 00000
--------------------
Attention: Xxx Xxxxxxx
--------------------
Phone: (000) 000-0000
--------------------
Fax: (000) 000-0000
--------------------
With a Copy to:
Xxxxx Xxxxxx
--------------------
000 Xxxxxxx Xxxxxx
--------------------
Xxx Xxxx, XX 00000
--------------------
Attention:
------------------
Phone: (000) 000-0000
------------------
Fax: (000) 000-0000
--------------------
FIRST UNION CAPITAL PARTNERS 2001, LLC
By:/s/ Xxxxxxxx X. Xxxxxx, XX
--------------------------
Name: Xxxxxxxx X. Xxxxxx, XX
Its: Partner
Address for Notice:
000 Xxxxx Xxxxxxx Xxxxxx
One First Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxxxxx X. Xxxxxx, XX
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy (which shall not
constitute notice) to:
Xxxxxxx Xxxxxxxxx Cobdell & Xxxxxxx, L.L.P.
Bank of America Corporate Center
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Attention: Xxxxxxxx X. Xxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
EXHIBIT A
SCHEDULE OF PURCHASERS
------------------------------------ ------------------------------------------
Sale Shares To Be Purchased at
Name of Purchaser Initial Closing
------------------------------------ ------------------------------------------
------------------------------------ ------------------- ----------------------
Number of Aggregate
Sales Shares Purchase Price
------------------------------------ ------------------- ----------------------
------------------------------------ ------------------- ----------------------
Gryphon Partners II, L.P. 381,340.41 $18,685,680
------------------------------------ ------------------- ----------------------
------------------------------------ ------------------- ----------------------
Gryphon Partners II-A, L.P. 26,822.86 1,314,320
------------------------------------ ------------------- ----------------------
------------------------------------ ------------------- ----------------------
Madison Dearborn
Capital Partners III, L.P. 16,970.13 $831,536.30
------------------------------------ ------------------- ----------------------
------------------------------------ ------------------- ----------------------
Madison Dearborn
Special Equity III, L.P. 376.81 $18,463.70
------------------------------------ ------------------- ----------------------
------------------------------------ ------------------- ----------------------
First Union
Capital Partners 2001, L.L.C. 17,346.94 $850,000
------------------------------------ ------------------- ----------------------
------------------------------------ ------------------- ----------------------
DB Capital Investors, L.P. 6,122.45 $300,000
------------------------------------ ------------------- ----------------------
------------------------------------ ------------------- ----------------------
Xxxxxx Capital
Private Equity Fund III, L.P. 29,154.51 $1,428,571
------------------------------------ ------------------- ----------------------
------------------------------------ ------------------- ----------------------
BNY Partners Fund L.L.C. 11,661.82 $571,429
------------------------------------ ------------------- ----------------------
------------------------------------ ------------------- ----------------------
TOTAL:
------------------------------------ ------------------- ----------------------
STOCK SUBSCRIPTION AGREEMENT
BY AND AMONG
GRYPHON PARTNERS II, L.P.,
GRYPHON PARTNERS II-A, L.P.,
OUTSOURCING SOLUTIONS INC.
AND
CERTAIN STOCKHOLDERS OF OUTSOURCING SOLUTIONS INC.
WHO ARE SIGNATORIES HERETO
Dated as of April 3, 2001
